Rick Santorum continues to nip at Mitt Romney’s heels in the race for the Republican’s US presidential candidacy. Stepping back from the fray in Washington’s Rock Creek Park, Edward Luce, US columnist, assesses Mr Santorum’s chances in next week’s primaries.

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Welcome back to our continuing coverage of the eurozone crisis.

After more than 13 hours of talks, a second bail-out for Greece was agreed early on Tuesday morning. We’ll be bringing you reaction to the deal throughout the day. All times are GMT. By John Aglionby, Leyla Boulton and Tom Burgis on the news desk in London.

We’re going to wrap up now since, after getting no sleep last night, diplomats and officials across the eurozone appear to be heading home while Athens remains abuzz with how it will meet its side of the second Greek bail-out. To recap today’s highlights:

  • Negotiators for private bondholders have backed the latest Greek deal forcing them to accept a haircut, but avoiding a disorderly default next month.
  • While the euro rallied, European equities closed down as the deal left investors unimpressed while US stocks neared a post-financial crisis high, driven by psychological thresholds .
  • Evangelos Venizelos, Greek finance minister, told an Athens press conference that the official offer on the bond swap would be made to bond holders by the end of this week. A government official added that the collective action clause, forcing holdout investors to participate, would be approved by parliament on Thursday.
  • Reaction on the streets of Athens was muted, with leftwing parties saying the deal was bound to make the recession worse. Aleka Paparriga, Greek Communist party leader, said “it’s not impossible that this crisis will turn into a disorderly default within months”.
  • Lucas Papademos, prime minister, convened a cabinet meeting to put the finishing touches to a pile of legislation that must pass in parliament by the end of February – if Greece’s credibility is to be maintained at the March 2 summit of European leaders, the next stage towards getting funding from the bailout agreed overnight.
  • Greek government officials confirmed that the country will hold a general election at the end of April or the beginning of May.

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Photo: Getty

Welcome back to our continuing coverage of the eurozone crisis.

By Esther Bintliff and John Aglionby in London and Anjli Raval in New York, with contributions from correspondents around the world. All times GMT.

It was decision day on the Greek bail-out. After so many twists to this saga here is a round-up of what came out of the meeting of eurozone finance ministers after more than 13 hours of talks, courtesy of Peter Spiegel and Alex Barker of the FT’s Brussels bureau.

  • A long-delayed €130bn second bail-out for Greece was agreed on.
  • Further “haircuts” were pushed for after a confidential debt analysis showed that the previously-negotiated deal would cost €136bn and would only lower Greek debt to 129 per cent, rather than 120 per cent, of economic output by 2020.
  • Although Greek bondholders agreed in October to accept a 50 per cent cut in the face value of their bonds, they will now be offered a “voluntary” deal with a haircut of 53.5 per cent.
  • That will get Greek debt levels to 120.5 per cent by 2020, close to the IMF’s goal for long-term debt sustainability.
  • The euro rose 0.8 per cent to 1.3257 on the news, before falling back to 1.3263 at 4.20 GMT.

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Further uncertainty in Greece and Chinese princeling Bo Xilai under pressure

This week Gideon Rachman discusses with Peter Spiegel, FT’s Brussels bureau chief, whether time really has run out for Greece. He also talks to Jamil Anderlini, FT’s Beijing bureau chief, about Bo Xilai, the Chinese princeling who recently suffered a severe blow to his chances of becoming a member of the Communist party leadership. Read more

Putin faces a a growing Russian protest movement, Xi Jingping visits Washington, and emissions trading causes friction at the EU-China summit

Gideon Rachman and FT correspondents in Moscow, Washington, Beijing, and Brussels discuss how Vladimir Putin will react to Russia’s growing protest movement, Xi Jingping’s visit to Washington and tensions ahead of the EU-China summit over the emissions trading scheme.

Euro banknotes placed on a map of Greece. Photo: Dado Ruvic, Reuters

Dado Ruvic, Reuters

Welcome to our continuing coverage of the eurozone crisis.

All times GMT. By Tom Burgis and Esther Bintliff in London, and Anjli Raval in New York, with contributions from FT correspondents around the world.

23.13 European finance chiefs deferred ratifying a rescue package for Greece, pressing the government in Athens to put a newly struck austerity plan into action. Here are some closing remarks after talks this evening where no final decision on the deal was made:

  • Greece is in “the middle of the road,” and much work remains on its recovery, the country’s prime minister Lucas Papademos said in a statement.
  • Greece must pass its latest austerity package into law and identify €325m  in spending cuts before euro-area governments endorse a second bailout for the country, Luxembourg prime minister Jean-Claude Juncker said after chairing the emergency meeting of euro-area finance ministers. “Despite the important progress achieved over the last days we didn’t yet have all necessary elements on the table to take decisions today,” he said.
  • Christine Lagarde, IMF managing director said: ”There is clearly some very encouraging news coming out of Athens and … after the very heavy duty work that has been done lately, I think it’s positive.”

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By Esther Bintliff and Claire Jones in London, with contributions from FT writers and editors in Davos.

All times GMT. This post should update automatically every few minutes, but it may take longer on mobile devices.

19.32 NEWS JUST IN. Lifen Zhang, editor-in-chief of FTChinese, writes that World Economic Forum officials are open to moving the date of next year’s event so that it does not clash with Chinese New Year.

The absence of Chinese senior officials – who stayed away from Davos this year due to the forum’s clash with Chinese lunar new year festivities – has been something of an embarrassment for organisers.
Especially this year, when there will be the once-a-decade leadership shuffle in China, it made sense for senior Chinese officials to stay home and celebrate the new year at home, where they can be be seen with the people during the festivities.
Now it appears that the World Economic Forum is open to moving the annual Davos gathering to an earlier date, possibly in mid-January, to ease the way for Chinese leaders to attend.

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Sarkozy trails in the polls and US Republicans’ search for a candidate continues

France’s Presidential campaign has begun ahead of the first round of voting in April, and Socialist challenger Francois Hollande is leading opinion polls. Paris bureau chief Hugh Carnegy and Europe editor Ben Hall join Shawn Donnan to discuss whether Nicolas Sarkozy could be facing defeat. Across the Atlantic, as Barack Obama set out his stall in the State of the Union address this week, the Republican party’s search for a candidate to oppose him in November grew ever more acrimonious and colourful. Chief US commentator Ed Luce and Washington bureau chief Richard McGregor join the show to discuss the campaign.

REUTERS/Christian Hartmann

By Esther Bintliff and Claire Jones in London, with contributions from FT editors and writers in Davos. All times GMT.

18.49 That’s it for today’s live blog.

The eurozone crisis and income inequality remained the key issues on day 2.

What’s in store for delegates this evening?

For those that still have the stamina to tackle the big issues, there’s a panel on what will emerge as the new European identity in the 21stcentury, and another discussion with no fewer than eight Nobel laureates on the state of the world.

For those looking for a little light relief, Paulo Coelho talks on the art of storytelling.

Join us tomorrow from 07.30 for day 3 of Davos.

18.45 The FT’s banking editor Patrick Jenkins spoke to Jamie Dimon, the straight-talking chief executive of JPMorgan, this afternoon. Mr Dimon revealed that the US bank had considered pulling its operations in the eurozone’s more troubled member states. Here are a selection of the best quotes. Read more

By Gillian Tett

When the World Economic Forum published its annual risk assessment report earlier this month, it featured a fascinating detail: for the first time ever, the issue of “income disparity” featured on the list of risks that WEF members expected to see this year.

More startling, this risk actually topped the list, beating out issues such as financial collapse, fiscal crisis or environmental issues. Welcome to a theme that I expect to crop up repeatedly in debate this week in Davos.

As the annual WEF meeting gets underway, the Occupy Wall Street movement has not yet stormed any cocktail parties (although I am told that protesters have built an igloo). But the issue of social and political protest is creeping into debate, even amid the canapés and wine. Read more

Tensions rise between Iran and the west and Nigeria tries to end a costly fuel subsidy

James Blitz, diplomatic editor, Javier Blas, commodities editor, and Roula Khalaf, Middle East editor, join Shawn Donnan to discuss the growing tensions between Iran and the west as the EU prepares an oil embargo. Read more

In his third video on the US 2012 presidential election campaign, FT columnist Edward Luce comments on the Republican nomination race from South Carolina, the next primary state. He says the conservative candidates, above all Newt Gingrich, are scrambling to prevent favourite Mitt Romney from clinching victory.

The Eurozone, the Hildebrand affair and prospects for political reform in Myanmar

As Greece continues to haunt the Eurozone, Berlin bureau chief Quentin Peel and Europe news editor Ben Hall join Gideon Rachman to discuss the latest developments in the crisis. Also, Zurich correspondent Haig Simonian discusses the fallout from the Philipp Hildebrand affair at the Swiss National Bank, and Gwen Robinson, south east Asia correspondent, discusses the prospects for political reform in Myanmar

Arab Spring special
Gideon Rachman is joined on the podcast by David Gardner, international affairs editor, and Roula Khalaf, Middle East editor, to discuss the major geopolitical upheaval of 2011: the Arab Spring.

The eurozone after Cameron’s veto, and the Durban climate talks
Shawn Donnan, Ben Hall and Peter Spiegel discuss the eurozone crisis following Cameron’s treaty veto, while Clive Cookson talks to Pilita Clark about the outcome of the Durban climate change talks.

Egyptian elections, pressure on Iran and demonstrations in Moscow

This week, Gideon Rachman talks to Roula Khalaf, Middle East editor, about the results of the Egyptian elections, where Islamist parties have won almost two-thirds of the vote and discusses the growing international pressure on Iran with James Blitz, defence and diplomatic editor. Also this week, David Crouch, Europe news editor, talks to Charles Clover, Moscow bureau chief, about the demonstrations in Moscow against Vladimir Putin. Read more

eurocoasterWelcome back to our live coverage of the eurozone crisis. By Tom Burgis, Esther Bintliff and Kimiko de Freytas-Tamura on the  newsdesk in London, with contributions from FT correspondents around the world. All times are GMT.

Europe’s leaders gathered in Brussels for another crunch summit. Expectations are running high for a new grand bargain to restore sanity to the eurozone’s finances and chart a course out of the debt crisis. Also today:

  • The European Central Bank cut interest rates by a quarter point to 1 per cent, as expected, and announced that it would accept more forms of collateral and offer longer-term loans to try to protect the banking system
  • Mario Draghi, ECB president, poured cold water on hopes the central bank was poised to take more aggressive action
  • The European banking authority unveiled its updated stress tests of 70 banks, which tripled the capital shortfall for the German banking sector and pushed up the Europe-wide deficit from €106bn in October to €115bn now

20:15: We’re winding up the liveblog for tonight, but you can follow the rest of the action at FT.com and we’ll be back again on Friday morning. Thanks for reading and for all the comments. Bon courage!

19.54: BREAKING – Peter Spiegel, the FT’s Brussels bureau chief, has this scoop from the summit:

EU leaders have begun their late-starting summit, and they were given a 6-page draft of their conclusions at the start. According to people who have seen it, some of the most interesting new language is on the eurozone bail-out funds.

The current version says the existing €440bn fund, the EFSF, will continue running for another 2 years financing its current programmes – which would not be transferred to the new fund, the €500bn ESM.

That would free up the ESM’s resources, giving the eurozone significantly more firepower, with the two funds running in parallel.

The conclusions say the ESM would have its maximum €500bn lending capacity, regardless of how much the EFSF is committed to.

That could mean as much as €200bn in new “bazooka” weaponry.

embed1  Read more

Nicolas Sarkozy and Angela Merkel prior to their meeting at the Elysee Palace on Monday. Photo: Remy de la Mauvinere/AP

Nicolas Sarkozy and Angela Merkel before their meeting at the Elysee palace on Monday. Photo: Remy de la Mauvinere/AP

Welcome back to our live coverage of the eurozone crisis. By Esther Bintliff on the world news desk in London, with contributions from FT correspondents around the world.

This post should update automatically every few minutes, but it may take longer on mobile devices. All times are GMT.


19.40: So, after a relatively quiet morning, this afternoon and evening have proved to be a bit of a rollercoaster.

  • First, Nicolas Sarkozy and Angela Merkel surprised everyone by announcing they had reached “comprehensive agreement” on a new set of fiscal rules ahead of the EU summit later this week. Of course we knew they were going to meet, but to be honest, we hadn’t expected them to say very much in public at this stage. So stock markets rallied, bond yields fell and suddenly it looked like a resolution to the eurozone crisis might be in sight…
  • Then, just when you thought it might be safe etc etcthis story broke. In brief: Standard and Poor’s has warned Germany and the five other triple A members of the eurozone that they risk having their top-notch ratings downgraded as a result of deepening economic and political turmoil in the single currency bloc. The US ratings agency is poised to announce later on Monday that it is putting Germany, France, the Netherlands, Austria, Finland, and Luxembourg on “creditwatch negative”, meaning there is a one-in-two chance of a downgrade within 90 days.

Understandably, investors took fright, and stock markets pared many of the gains made earlier in the day. There will be more news on this story tonight – see FT.com for all the latest. In the meantime thanks for reading, and for all the comments. Read more

World Weekly climate change special: the Durban summit

In a World Weekly special on climate change, guest host Clive Cookson, science editor, is joined by Pilita Clark, environment correspondent, and Chris Giles, economics editor, to discuss how the conflict between the industrialised and emerging economies is shaping the discussions at the climate change summit in South Africa. Read more

Sarkozy after delivering a speech on the eurozone crisis in Toulon. Photo: Jean-Paul Pelissier/Reuters

Photo: Jean-Paul Pelissier/Reuters

Welcome back to the FT’s live coverage of the eurozone debt crisis and its global fallout. By John Aglionby, Tom Burgis and Esther Bintliff on the news desk in London with contributions from correspondents around the world.

Pressure is once again mounting on eurozone leaders to find a convincing solution to the sovereign debt crisis. Today:

Mario Draghi, the head of the European Central Bank made a key speech to the European Parliament, hinting at greater ECB action if governments moved towards a “fiscal compact”

  • France and Spain held bond auctions
  • French president Nicolas Sarkozy addressed the nation on his plan to resolve the crisis – he sided with Angela Merkel in calling for treaty change, said he was convinced the ECB would act “when faced with the risk of deflation that threatens Europe”, and called for greater fiscal integration
  • The Bank of England issued its six-monthly financial stability report. Sir Mervyn King, governor, said the eurozone debt crisis is triggering a spiral that is characteristic of nothing short of a crisis to the entire financial system
  • The world’s biggest economies reported key manufacturing data
  • Christine Lagarde said the G20 would commit the necessary resources for the IMF to play its “systemic role” if circumstances required (see our 19.44 update)
  • Brazil’s finance minister Guido Mantega said Brazil was willing to contribute funds to the IMF to help alleviate the eurozone crisis, noting: “This time, the IMF did not come here bringing money as in the past… This time it came to ask Brazil to lend it money and I prefer to be a creditor than a debtor.”

22.32: Tony Barber, the FT’s Europe editor in London, has been analysing the landmark speech by French president Nicolas Sarkozy and offers these insights:  Read more